28 Oct Doctor-owned hospitals race to beat Medicare deadline

USAToday.com | October 28 – HAMMOND, La. — At the Cypress Pointe Surgical Hospital here, construction workers scrambled on a recent day to turn a mud pit into a parking lot and put other finishing touches on the $35 million physician-owned facility.

They are on a tight deadline. The health care overhaul law closes the door on future physician-owned hospitals, requiring new ones to be open and certified by Medicare by Dec. 31. Otherwise, they’ll be barred from taking part in Medicare, the health program for the elderly, as well as other federal health programs. That would be a fatal blow to most hospitals because about half of their revenue comes from those programs.

Physician-owned hospitals, which proliferated in the 1990s, have sparked intense battles within the hospital industry for years. The facilities’ rivals — non-profit community hospitals and for-profit institutions without physician investors — have long pressed Congress to curb physician facilities. In 2003, Congress imposed a lengthy moratorium on the construction of new doctor-owned hospitals that specialize in cardiac, orthopedics and other specific areas.

The new law is much tougher. It applies to all physician hospitals, even those that aren’t specialty facilities. Besides barring new doctor-owned hospitals after this year, it prohibits the 269 existing institutions from expanding unless they meet stringent conditions. As a result, backers of the physician hospitals say, the new law is something of a legal minefield for doctors’ facilities.

As many as 30 new hospitals are expected to beat the year-end deadline, says Molly Sandvig, executive director of Physician Hospitals of America, a trade group based in Sioux Falls, S.D. Another 44 hospitals will be unable to open by Dec. 31, she says, and are trying to decide what to do. Doctor-investors may have to sell their ownership stakes to allow the hospitals to open.